✦ High Court of India · 10 Jun 2024

McDermott International Inc v. Burn Standard Co. Ltd. and others reported in

Case Details High Court of India · 10 Jun 2024

Court

High Court of India

Decided

10 Jun 2024

Bench

Not available

Length

1,571 words

Acts & Sections

Arbitration Act §37 Commercial Courts Act 2015 The Arbitration and Conciliation Act 1996

Cited in this judgment

O.S.A (CAD) No.146 of 2021IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 10.06.2024CORAMTHE HONOURABLE MR.JUSTICE M.SUNDARand THE HONOURABLE MRS.JUSTICE K.GOVINDARAJAN THILAKAVADIO.S.A (CAD) No.146 of 2021&C.M.P.Nos.20504 and 20517 of 2021 in O.S.A (CAD) No.146 of 2021Chennai Container Terminal (P) Ltd.,Represented by its Managing Director /CEOAdministrative BuildingChennai Port TrustNo.1, Rajaji SalaiChennai – 600 001 ... Appellant Vs.The Chennai Port Trust Represented by its Chief Mechanical EngineerChennai Port TrustNo.1, Rajaji SalaiChennai – 600 001 .. Respondent Original Side Appeals filed under Section 13 (1-A) of Commercial Courts Act, 2015 to set aside the order dated 22.10.2021 in O.P.No.400 of 2020.For Appellant: Mr.R.Murari Senior counsel for Mr.Vinod KumarFor Respondent : Mr.AR.L.Sundaresan1/12 https://www.mhc.tn.gov.in/judis O.S.A (CAD) No.146 of 2021Additional Solicitor GeneralAssisted byMr.R.KarthikeyanJUDGMENT(Judgment of the Court was delivered by M.Sundar, J.)Captioned 'Original Side Appeal' ['OSA' for the sake of brevity] has been presented in this 'Commercial Appellate Division' ['CAD' for the sake of brevity] on 25.11.2021 assailing an 'order dated 22.10.2021 made in O.P.No.400 of 2020 and A.No.2155 of 2020 thereat by a Hon'ble single Judge of this Court' [hereinafter 'impugned order' for the sake of convenience and clarity].2. Captioned OSA in this CAD is a statutory appeal under Section 37 of 'The Arbitration and Conciliation Act, 1996 (Act No.26 of 1996)' [hereinafter 'A and C Act' for the sake of convenience and clarity] and aforementioned O.P.No.400 of 2020 before Hon'ble single Judge is one under Section 34 of A and C Act.3. An arbitral award dated 06.02.2019 made by a three member 'Arbitral Tribunal' ('AT' for the sake of brevity) [to be noted, 2/12 https://www.mhc.tn.gov.in/judis O.S.A (CAD) No.146 of 2021three former Hon'ble Judges of this Court constituted the AT] was before Section 34 Court vide aforementioned O.P.No.400 of 2020. This '06.02.2019 award' shall be referred to as 'impugned award' for the sake of brevity and convenience. It is necessary to write that the three Hon'ble Arbitrators wrote three separate opinions and therefore, three Hon'ble Arbitrators consolidated their opinions and tersely set out the unanimous / majority verdict on all the 19 issues which the AT dealt with.4. Verdict qua Issue Nos.1 to 5 is common and it is set out vide three sub-paragraphs (A), (B) and (C). The petition assailing the impugned award was filed by the claimant before AT namely 'Chennai Port Trust' ['CPT' for the sake of brevity] and obviously sole respondent before the AT namely 'Chennai Container Terminal (P) Ltd., ['CCTPL' for the sake of brevity] was the sole respondent before Section 34 Court.5. After full contest, Section 34 Court in and by the impugned order said that aforementioned Issue Nos.1 to 5 before the AT are reclassified as Issue No.3 before the 34 Court and that Issue No.3 alone is set aside. It was also made clear that parties can go for fresh arbitration only on this Issue No.3. When an award is set aside by a Section 34 3/12 https://www.mhc.tn.gov.in/judis O.S.A (CAD) No.146 of 2021Court, the consequence is re-arbitration vide paragraph 52 of McDermott case law {McDermott International Inc. Vs. Burn Standard Co. Ltd. and others reported in (2006) 11 SCC 181} and this paragraph reads as follows:'52. The 1996 Act makes provision for the supervisory role of courts, for the review of the arbitral award only to ensure fairness. Intervention of the court is envisaged in few circumstances only, like, in case of fraud or bias by the arbitrators, violation of natural justice, etc. The court cannot correct errors of the arbitrators. It can only quash the award leaving the parties free to begin the arbitration again if it is desired. So, the scheme of the provision aims at keeping the supervisory role of the court at minimum level and this can be justified as parties to the agreement make a conscious decision to exclude the court's jurisdiction by opting for arbitration as they prefer the expediency and finality offered by it.'6. In the case on hand, Section 34 Court has restricted the re-arbitration to Issue No.3 before it [Issue Nos.1 to 5 before the AT]. In this regard, paragraph 38 of the impugned order becomes relevant and the same reads as follows:'38. Taking note of the settled position of law as discussed above, this Court is of the view the contract has to be read in entirety one clause cannot be read in isolation. 4/12 https://www.mhc.tn.gov.in/judis O.S.A (CAD) No.146 of 2021Paragraph 2 and Clause (e) of the Article 3.12 and other clauses ought to have been construed in the context of the back ground on which clauses have been included. Therefore, such interpretation should be based on judicial approach should not be in arbitrary manner. The Arbitrator cannot supplant their own reasons ignoring the vital documents and evidence particularly to asses the nature of the expenses incurred which are meant to be paid by the Respondent who are the beneficiary of such service. Hence, this Court is of the view that the Award certainly suffers on the ground of patent illegality. Therefore, Award relating to the e interpretation of contract alone can be interfered as the same is severable.' (underlining made by this Court for ease of reference)7. Assailing the impugned order of Section 34 Court, CCTPL has preferred the captioned intra-court appeal under Section 37 of A and C Act in this CAD. 8. Mr.R.Murari, learned Senior counsel instructed by Mr.Vinod Kumar of M/s.J.Sagar Associates (Law Firm) for the appellant and learned Additional Solicitor General of India Mr.AR.L.Sundaresan instructed by Mr.R.Karthikeyan, learned Standing counsel for CPT were before us.5/12 https://www.mhc.tn.gov.in/judis O.S.A (CAD) No.146 of 20219. Adverting to aforementioned impugned order, learned Senior counsel for appellant CCTPL and learned Solicitor very fairly agreed that the impugned order tantamounts to modification of the impugned award as it has interfered with only part of the impugned award and therefore, the same is contrary to the Hakeem principle, namely ratio laid down by Hon'ble Supreme Court in Project Director NHAI Vs. M.Hakeem reported in (2021) 9 SCC 1 wherein it was laid down that modification of an arbitral award is impermissible in a Section 34 legal drill.10. A three member Bench of the Hon'ble Supreme Court doubting the correctness of Hakeem, formulated five questions and directed the same to be placed before the Hon'ble Chief Justice of India for an appropriate order. This is vide proceedings / orders dated 20.02.2024 in Special Leave to Appeal (c) Nos.15336-15337/2021 and the order reads as follows:6/12 https://www.mhc.tn.gov.in/judis O.S.A (CAD) No.146 of 20217/12 https://www.mhc.tn.gov.in/judis O.S.A (CAD) No.146 of 20218/12 https://www.mhc.tn.gov.in/judis O.S.A (CAD) No.146 of 202111. We are informed by both sides that the reference is before a Constitution Bench and therefore, a Constitution Bench of Hon'ble Supreme Court is in seizin of the question, more particularly the five questions qua Hakeem, which are subject matter of reference.12. When a matter is under reference and in seizin qua a Larger Bench, the original order will continue to hold the field until the reference is answered one way or the other. In this view of the matter, both sides fairly agreed that the matter is to be remitted back to Section 34 Court albeit leaving all questions open including resorting to sub-section (4) of Section 34 of A and C Act. Therefore, on the short point of Hakeem 9/12 https://www.mhc.tn.gov.in/judis O.S.A (CAD) No.146 of 2021principle, the same being under reference and in the light of the consensus between the two sides, we make the following order:i) Impugned order dated 22.10.2021 made in O.P.No.400 of 2020 and A.No.2155 of 2020 thereat is set aside and the matter is remanded back to the Section 34 Court;ii) It is made clear that the impugned order is set aside solely for the purpose of a de novo Section 34 legal drill and this means that this Section 37 Court has not expressed any view or opinion on the merits of the matter;iii) All questions before Section 34 Court are left open;iv) For adding specificity, we make it clear that it is open to the Section 34 Court either to resort to sub-section (4) of Section 34 or hear out Section 34 petition on merits and sustain or dislodge the award. If the reference is answered in the interregnum, obviously Hakeem ratio as answered in reference by Hon'ble Supreme Court will govern the proceedings; .v) In the light of sub-section (6) of Section 34, we deem it appropriate to request Section 34 Court to dispose of 10/12 https://www.mhc.tn.gov.in/judis O.S.A (CAD) No.146 of 2021the matter which is remanded back to it as expeditiously as the business of Section 34 Court would permit.vi) In this regard, we deem it appropriate to refer to paragraph 25 of State of Bihar Vs. Bihar Rajya Bhumi Vikas Bank Samiti reported in (2018) 9 SCC 472 and order dated 10.12.2020 in O.P.No.527 of 2020 [M.Subbiah Vs. Daimler Financial Services India Pvt. Ltd., and another] made by a Section 34 Court wherein in the light of sub-section (5) being held to be directory, the reckoning date in cases when a Section 34 protagonist approaches the Section 34 Court without issue of sub-section (5) notice would become the date of presentation. In other words, time line qua sub-section (6) of Section 34 is the reminder as regards Section 34 legal drill that is to ensue.Captioned OSA and captioned CMPs are disposed of with the aforementioned directives. There shall be no order as to costs. (M.S.J.) (K.G.T.J.) 10.06.2024Index:Yes/NoNeutral Citation: Yes/Nogpa11/12 https://www.mhc.tn.gov.in/judis O.S.A (CAD) No.146 of 2021M.SUNDAR.J.,andK.GOVINDARAJAN THILAKAVADI, J.,gpaO.S.A (CAD) No.146 of 202110.06.202412/12

Find similar cases Start drafting free

This is the original judgment text as indexed from the source corpus. Always verify against the official court record before relying on it in a filing — you can do so on eCourts or the Supreme Court of India website. ← Search more judgments

More cases under Arbitration Act